Professor Philip Vaccaro                     


FALL SEMESTER , 5th  EXAMINATION , Chapters 12 and 13


NAME_Due T/W, December 8th / 9th  on scantron sheet



MULTIPLE CHOICE : ( select the most correct response )




  1. Which one of the following is an aggressive alternative for aggregate




    1. use seasonal inventories to buffer the manufacturing process from

variations in customer demand.

    1. offer complementary products or services with contra-cyclical demand


    1. use overtime and undertime to change workforce levels.
    2. use subcontracting to overcome short-term capacity shortages.




  1. Which of the following factors is (are) NOT included in ordering cost ?



    1. bill paying.
    2. obsolescence.
    3. purchasing department overhead costs.
    4. inspecting incoming inventory.
    5. development and authorization of purchase orders.




  1. Possible decision variables that should be considered for aggregate plans




    1. equipment rental.
    2. extra labor shifts.
    3. backordering.
    4. all of the above.
    5. none of the above.





  1. Regarding the master production schedule (MPS) :


    1. the external suppliers are sent copies of the MPSs in advance.
    2. the time horizon of the MPSs  must equal the time horizon of the

selected aggregate plan.

    1. the capacity requirements of the MPSs  must equal or exceed the available capacity of the selected aggregate plan.
    2. all of the above.
    3. none of the above.



  1. Which of the following statements regarding the economic order quantity

 ( EOQ ) is true?


    1. if materials handling costs were to drop, the inventory carry cost per unit of  an item would decrease and the EOQ would also decrease.
    2. the EOQ model assumes a variable demand pattern.
    3. the EOQ model combines several different item orders to the same supplier.
    4. if an order quantity is larger than the EOQ, the annual holding (carry)

cost for inventory exceeds the annual ordering cost.



  1. In the basic EOQ model, if lead time increases from 3 to 6 days, the EOQ



  1. double.
  2. increase, but not double.
  3. remain the same.
  4. decrease by a factor of ‘2’.



  1. Consider a piecemeal replenishment situation where the production rate is

100 units per day, the demand (consumption) rate is 4 units per day, and the

economic production lot size is 500 units. Which of the following statements

is true?


  1. the average inventory per cycle is 250 units.
  2. the average inventory per cycle is greater than 250 units.
  3. the rate of buildup in inventory during the production cycle is

less than 100 units per day.

  1. the rate of buildup in inventory during the production cycle is greater

than, or equal to 400 units per day.




  1. An item experiences an annual demand of 7,200 units. It costs $8.00 to hold

       the item in inventory for one year and $16.00 to place an order. If the EOQ

       model is used, what is the time between orders?


  1. less than 1 week.
  2. greater than 1 week but <= 2 weeks.
  3. greater than 2 weeks but <= 3 weeks.
  4. greater than 3 weeks.


  1. Annual demand for a product is 1,600 units, and the holding cost is $2.00 per

     unit per year.  The cost of setting up the production line is $25.00 . There are

     200 working days per year.  The production manager decided to produce 200

     units each time she started production. If it takes her 4 days to produce the

     200 units, what was her production rate?


  1. 80 units per day.
  2. 60 units per day.
  3. 50 units per day.
  4. 100 units per day.
  5. 40 units per day.



  1. Judith Thompson is the manager of the student center cafeteria. She orders

         frozen pizzas and bakes them on the premises.  She anticipates a weekly

demand of ten (10) pizzas. The cafeteria is open 45 weeks a year, 5 days a

         week. The ordering cost is $15.00 and the holding cost is $0.40 per pizza per

         year.  What is the optimal number of pizzas Judith should order?


  1. 184
  2. 9
  3. 5
  4. 28
  5. none of the above.


  1. Given the data in the previous question, the pizza vendor has a four (4) day

        leadtime, and Judith wants to maintain 1 pizza for safety stock.  What is the

        least cost reorder point ?


  1. 10
  2. 8
  3. 4
  4. 9
  5. none of the above.




  1. The annual demand for a product is 1,000 units. The company orders 200 units

        each time an order is placed.  The leadtime is six (6) days.  There are 250 work-

        ing days per year.  If the reorder point is 50 units, what safety stock are they

        using ?


  1. 22
  2. 4
  3. 26
  4. 28
  5. none of the above.



  1. A manager is using the normal distribution to determine the safety stock for a

        product.  The  z-value of 2.33 would be associated with what service level ?


  1. 95%
  2. 97.5%
  3. 98%
  4. 99%
  5. none of the above.








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